Brazil’s Middle-Class Anxiety

By the Editors -
Jun 18, 2013

It is tempting to liken this week’s
surprising protests in Brazil, which have attracted huge crowds
in the country’s biggest cities, to another movement a couple of
years ago in the Northern Hemisphere. But there are important
differences between Brazil’s unrest and the Occupy Wall Street
movement.

Both succeeded in organizing the discontent of the middle
class. Both started with specific complaints -- in Brazil, a 20-centavos (9 cents) rise in bus fares; in the U.S., the excesses
of Wall Street after the bailouts of the financial crisis -- and
soon grew to include a long list of amorphous and unrelated
grievances. For Occupy Wall Street, it was everything from the
cost of health care to Israeli-Palestinian politics; in Brazil,
it includes health care as well as schools, crime, official
corruption and public spending on the World Cup in 2014 and the
Summer Olympics in 2016.

Another way of looking at both movements is that they were
prompted by particular grievances but soon grew to embrace
deeper structural inequities. And that is where the differences
between the protests become more apparent. U.S. economic anxiety
is less palpable than the Brazilian variety, in part because the
U.S. is better able to withstand the upheavals wrought by
economic turmoil and protect its middle class.

Food Prices

It is probably no coincidence that the Brazilian protests
were spurred by a rise in bus fares. (It’s worth noting that the
spark behind the Arab Spring uprisings was soaring food prices;
increases in food costs tend to destabilize democratic
governments in developing nations.) Inflation has been picking
up, particularly for food and fuel, and was 6.5 percent at the
end of last month. Meanwhile, wage increases have barely kept
pace with rising prices.

It all comes after a decade of strong growth. The Brazilian
economy expanded at an average of more than 3 percent a year
between 2000 and 2010, almost double the rate of the U.S. Much
of the growth was driven by demand for raw materials, largely
from China. The expansion gave millions of poor Brazilians
purchase on a middle-class lifestyle. Combined with the
availability of easier credit, Brazilians were able to buy
electronics, cars and air conditioners.

Never mind that Brazil by many measures remained a country
riven by one of the most unequal distributions of wealth and
income in the world. The ascent of the middle class, combined
with social programs promoted by President Dilma Rousseff and
her predecessor, Luiz Inacio “Lula” Da Silva, seemed secure.

Not so much anymore. Annual growth since Rousseff took
office in January 2011 has averaged 2.2 percent and was less
than 1 percent for three quarters last year. It is the fragility
of the Brazilian economy’s gains, so recently won, that
undoubtedly fuels the unrest in Brazil. Whatever else might be
said about the U.S. economy, it has proved itself over the last
half-decade to be remarkably sturdy.

Rousseff doesn’t lack for reform plans -- to Brazil’s tax
code, its pension system, its labor laws, to name a few -- and
they are worth pursuing. It’s unlikely, however, that a dry
recital of the necessity of economic reform will mean much to
the hundreds of thousands of poor and middle-class Brazilians on
the streets this week.

In that respect, Rousseff’s more immediate response to the
unrest is encouraging. As a former revolutionary who was
tortured during the dictatorship that ruled Brazil from 1964 to
1985, Rousseff knows something about challenging authority.
“Peaceful protests are legitimate and a part of democracy,” she
said in a statement posted on the presidential blog, ensuring
that many of the young people protesting were likely to see it.
Rousseff may want to get some printouts of her statement to hand
out to police, who have been firing rubber bullets and tear gas
at protesters in Rio de Janeiro and Brasilia.

The rallying cry at many of the protests is “O gigante
acordou,” which translates as “The giant has awakened” (the
reference is to a line from Brazil’s national anthem). Unless
Rousseff can restore the growth that salves middle-class
anxieties, those words will sound more like a threat than a
promise.